20:45 PM | April 21, 2014 | —Francinia Protti-Alvarez
Platform Specialty Products (Miami) has entered into a definitive agreement to acquire Chemtura’s pesticides business for $1 billion. The price consists of $950 million in cash plus 2 million shares of Platform common stock. The deal is expected to close in the second half. Platform acquired MacDermid (Denver), a specialty chemical maker, in October last year and renamed the business Platform Specialty Products.
Chemtura’s pesticides business reports net sales of approximately $449 million and adjusted Ebitda of $101 million. The business provides seed treatment and pesticide products for a wide variety of crop applications. The portfolio includes seed treatments, insecticides, miticides, herbicides, fungicides, plant growth regulators, and adjuvants.
The unit’s senior management team, led by president Nelson Gibson, will remain, Platform says. Chemtura’s ag business has a strong position in high-growth seed and a balanced portfolio exposure across row crops such as corn, soybeans, and cereals as well as specialty niche crops such as tree and vine fruits, nuts, vegetables, and ornamentals, Platform officials say. Platform says it will pursue a “virtual active ingredient” manufacturing model and that it has entered into a long-term supply agreement in which Chemtura will supply key actives. Platform says it will pursue acquisitions and licensing of others’ active ingredients to take advantage of the existing global registrations and distribution footprint of Chemtura’s pesticides business.
The purchase provides a strong position in an attractive new vertical, says Daniel Leever, Platform’s CEO. “Like MacDermid, Chemtura AgroSolution’s innovation capabilities and highly-skilled technical and service personnel create a unique value proposition. This asset-light, high-touch approach is pivotal to Platform’s business model and facilitates margin expansion, increased profitability, and significant free cash flow.”
Chemtura says that after the sale its core platform will be focused on industrial performance products (IPP), which includes petroleum additives and urethanes, and industrial engineered products (IEP), which consists of flame retardants, brominated products, and organometallics. Those businesses generated approximately $1.8 billion in pro forma net sales and $200 million of adjusted Ebitda, Chemtura says.
“The sale... furthers Chemtura’s transformation into a focused, pure-play industrial specialty chemical company,” says Craig Rogerson, chairman and CEO of Chemtura. “We are excited about the prospects of our industry-leading platforms, including IPP, which increased revenues by 10% and adjusted Ebitda by 9% in 2013, and IEP, which has a proven track record and a strategy to drive revenue, price, and cost improvements as 2014 progresses. We are confident that these leading, global platforms can deliver growth from secular opportunities going forward and benefit from cyclical recovery as it occurs.”
Barclays and Lazard acted as financial advisors, and Greenberg Traurig acted as legal advisor to Platform on the transaction. Barclays has committed financing for the acquisition. Morgan Stanley acted as financial advisor, and Debevoise & Plimpton acted as legal counsel for Chemtura.